September 21, 2017
Bank of Japan

Statement on Monetary Policy

1.

At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided
upon the following.
(1) Yield curve control
The Bank decided, by an 8-1 majority vote, to set the following guideline for market
operations for the intermeeting period. [Note 1]
The short-term policy interest rate:
The Bank will apply a negative interest rate of minus 0.1 percent to the Policy-Rate
Balances in current accounts held by financial institutions at the Bank.
The long-term interest rate:
The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB
yields will remain at around zero percent. With regard to the amount of JGBs to bepurchased, the Bank will conduct purchases at more or less the current pace -- an annual
pace of increase in the amount outstanding of its JGB holdings of about 80 trillion yen -aiming to achieve the target level of the long-term interest rate specified by the guideline.
(2) Guidelines for asset purchasesWith regard to asset purchases other than JGB purchases, the Bank decided, by aunanimous vote, to set the following guidelines.
a) The Bank will purchase exchange-traded funds (ETFs) and Japan real estate
investment trusts (J-REITs) so that their amounts outstanding will increase at annual
paces of about 6 trillion yen and about 90 billion yen, respectively.
b) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at
about 2.2 trillion yen and about 3.2 trillion yen, respectively.

2.

Japan's economy is expanding moderately, with a virtuous cycle from income to spending
operating. Overseas economies have continued to grow at a moderate pace on the whole. Inthis situation, exports have been on an increasing trend. On the domestic demand side,1

business fixed investment has been on a moderate increasing trend with corporate profits
improving. Private consumption has increased its resilience against the background of steady
improvement in the employment and income situation. Meanwhile, public investment hasbeen increasing and housing investment has been more or less flat. Reflecting these increases
in demand both at home and abroad, industrial production has been on an increasing trend,
and labor market conditions have continued to tighten steadily. Financial conditions arehighly accommodative. On the price front, the year-on-year rate of change in the consumer
price index (CPI, all items less fresh food) is around 0.5 percent. Inflation expectations haveremained in a weakening phase.
3.

With regard to the outlook, Japan's economy is likely to continue its moderate expansion.
Domestic demand is likely to follow an uptrend, with a virtuous cycle from income tospending being maintained in both the corporate and household sectors, on the back of highly
accommodative financial conditions and fiscal spending through the government's large-scale
stimulus measures. Exports are expected to continue their moderate increasing trend on theback of the improvement in overseas economies. The year-on-year rate of change in the CPI
is likely to continue on an uptrend and increase toward 2 percent, mainly on the back of an
improvement in the output gap and a rise in medium- to long-term inflation expectations. [Note 2]

4.

Risks to the outlook include the following: the U.S. economic policies and their impact on
global financial markets; developments in emerging and commodity-exporting economies;
negotiations on the United Kingdom's exit from the European Union (EU) and their effects;
prospects regarding the European debt problem, including the financial sector; andgeopolitical risks.

5.

The Bank will continue with "Quantitative and Qualitative Monetary Easing (QQE) with
Yield Curve Control," aiming to achieve the price stability target of 2 percent, as long as it isnecessary for maintaining that target in a stable manner. It will continue expanding themonetary base until the year-on-year rate of increase in the observed CPI (all items less freshfood) exceeds 2 percent and stays above the target in a stable manner. The Bank will makepolicy adjustments as appropriate, taking account of developments in economic activity andprices as well as financial conditions, with a view to maintaining the momentum towardachieving the price stability target.

2

[Note 1]

Voting for the action: Mr. H. Kuroda, Mr. K. Iwata, Mr. H. Nakaso, Mr. Y. Harada, Mr. Y. Funo,
Mr. M. Sakurai, Ms. T. Masai, and Mr. H. Suzuki. Voting against the action: Mr. G. Kataoka.
Mr. G. Kataoka dissented, considering that, since there remained an excess supply capacity in capitalstock and the labor market, monetary easing effects gained from the current yield curve were notenough for 2 percent inflation to be achieved around fiscal 2019.
[Note 2]
Mr. G. Kataoka opposed the description on the outlook for the CPI, considering that, although theyear-on-year rate of change in the CPI was likely to increase for the time being reflecting
developments in crude oil prices and foreign exchange rates, the possibility of the rate of change
increasing toward 2 percent from 2018 onward was low at this point.

3

(Reference)
Meeting hours:
Wednesday, September 20: 14:00-15:44
Thursday, September 21: 9:00-12:08
Policy Board members present:
Haruhiko Kuroda (Governor)
Kikuo Iwata (Deputy Governor)
Hiroshi Nakaso (Deputy Governor)
Yutaka Harada
Yukitoshi Funo
Makoto Sakurai
Takako Masai
Hitoshi Suzuki
Goushi Kataoka(Others present)
September 20
From the Ministry of Finance:
Tetsuo Kabe, Deputy Vice Minister for Policy Planning and Co-ordination (14:00-15:44)
From the Cabinet Office:
Mamoru Maekawa, Vice-Minister for Policy Coordination (14:00-15:44)
September 21
From the Ministry of Finance:
Minoru Kihara, State Minister of Finance (9:00-11:50, 11:59-12:08)
From the Cabinet Office:Takao Ochi, State Minister of Cabinet Office (9:00-11:50, 11:59-12:08)

Release Dates and Time:
Statement on Monetary Policy -- Thursday, September 21 at 12:15
Release Schedule:
Summary of Opinions -- Friday, September 29 at 8:50
Minutes -- Monday, November 6 at 8:50